USD/CAD Weekly Outlook

USD/CAD continued to stay in established range above 0.9841 short term bottom last week. Price actions from there looked corrective so far, which suggest that recent decline from 1.0522 isn't finished yet. Though, there is no clear selling pressure for the moment. Initial bias will remain neutral this week for some more sideway trading. But another fall will now remain in favor as long as 1.0052 resistance holds. Below 0.9900 will likely send USD/CAD through 0.9841 towards 100% projection of 1.0656 to 0.9891 from 1.0522 at 0.9757.

In the bigger picture, 0.9406 is a medium term bottom and rise from there is not finished yet. Fall from 1.0656 should merely be a correction and would finish soon and above 0.9725 support. The third leg of the pattern from 0.9406 should then start and send USD/CAD through 1.0656 towards 38.2% retracement of 1.3063 to 0.9406 at 1.0803 and above. After all, price actions from 0.9406 medium term bottom could either be consolidation to fall from 1.3063 or the third leg of the whole consolidation pattern from 2007 low of 0.9056. In either case, stronger rally is anticipated in medium term.

In the longer term picture, there is no clear indication that the long term down trend from 2002 high of 1.6196 has reversed even though bullish convergence condition was seen in monthly MACD. Current development dampens the case that fall from 1.3063 is resuming the such down trend. But there is no change in the long term bearish view so far. A break of 0.9056 low is still anticipated after all the consolidative price actions complete.